The importance of measuring financial viability: the example of orange sweet potato processing in Uganda

01.10.2014
Processing agricultural produce can be a way for farmers to avoid fluctuating crop prices and improve the nutritional status of their households. For such processing to add value and increase farmers’ incomes, there are a number of factors that need to be ascertained.This paper puts forward a methodology for calculating the cost of capital equipment, raw materials, and processing costs on an annualized per kilogram basis. This enables producers to compare their production costs with the price offered for the final product, including the dried chips produced for sale by small-scale producers .The key message is not that orange sweet potato processing should be abandoned but to highlight the areas that need to be addressed by implementing organizations, particularly given the extent that past root crop processing initiatives have relied on uncosted time and free financial inputs by the promoting organization. The true costs of processing should be identified, using a similar methodology to that suggested here, and discussed with groups who express an interest in processing. Markets, and all the quality requirements, must be established with a buyer before production is started.This research is based on work undertaken as part of the HarvestPlus Reaching End Users project in Uganda to promote the uptake of vitamin A-rich orange sweet potato by small-scale farmers – a project funded by the Bill and Melinda Gates Foundation between 2006 and 2009 to reduce vitamin A deficiency.